Oli Wong and Hannah Kuo
To accommodate the amendment to Article 172-2 of the Company Law, the Taiwan Financial Supervisory Commission (hereinafter, the “FSC”) promulgated the Partial Amendments to the Regulations Governing the Administration of Shareholder Services of Public Companies (hereinafter, the “Shareholder Services Regulations”) and the Partial Amendments to Articles 3 and 6 of the Regulations Governing Content and Compliance Requirements for Shareholders’ Meeting Agenda Handbooks of Public Companies (hereinafter, “Agenda Handbooks Regulations”) on March 4, 2022, and the regulations are both implemented from the promulgation date onwards and went into effect on March 6 of the same year. These amendments are highlighted below:
I. The types and criteria for remote shareholders’ meetings (Article 44-9 of the Shareholder Services Regulations)
Virtual shareholders’ meetings consist of “virtual-only meetings” (shareholders’ meetings that are only conducted virtually and no physical meetings) and ” hybrid meetings ” (physical shareholders’ meetings assisted with visual video conferencing ). A company seeking to conduct a virtual shareholders’ meeting is required to stipulate this in the Articles of Incorporation with a resolution adopted in the board meeting. If such a meeting is organized by other people with convening rights (such as supervisors, shareholders holding over 3% shares, or shareholders holding the majority of the shares), a board resolution is not required.
If a company’s Articles of Incorporation have not specifically stipulated that a virtual shareholders’ meeting may be conducted yet, the company may conduct a ” hybrid meeting ” by a special board resolution within one year after the promulgation date of the amendments without amending the Articles of Incorporation first.
II. Restrictions on agenda items in virtual shareholders’ meetings (Article 44-11 of the Shareholder Services Regulations)
If a public company seeks to conduct a ” virtual-only meeting ,” there shall not be any agenda items concerning the election or removal of directors or supervisors, major actions, or amalgamation (including important agenda items such as the major actions, amalgamation, and corporate division under Articles 185 and 316 of the Company Law; the mergers, acquisitions, and share transfer under Articles 18, 27, and 29 of the Business Mergers and Acquisitions Law; and the business assignment and share conversion under Article 24, Paragraph 2, Subparagraph 1 and Article 26, Paragraph 2, Subparagraph 1 of the Financial Holding Company Law).
If a public company seeks to conduct a ” hybrid meeting ,” the agenda items for that shareholders’ meeting shall not include items such as the election of directors or supervisors (if there is an agenda item concerning the election of directors or supervisors, the number of candidates shall not exceed the elected seats) or their removal.
Whether a “virtual-only meeting” or a “hybrid meeting” is desired, a public company whose shares are not listed on the stock exchange or traded on the over-the-counter (OTC) market should outsource shareholder services agencies to handle shareholder services.
III. The requirement that a virtual shareholders’ meeting shall be outsourced (Article 44-10 of the Shareholder Services Regulations)
To ensure the neutrality of virtual shareholders’ meetings, matters related to a company’s virtual shareholders’ meetings should be outsourced to shareholder services agencies or Taiwan Depository & Clearing Corporation, and the agency retained to handle matters related to virtual shareholders’ meetings shall not be concurrently retained to handle shareholders service matters.
IV. Manners of shareholders’ participation in virtual shareholders’ meetings (Article 44-13, Article 44-14, and Article 44-16)
If a shareholder, proxy solicitor, or proxy wishes to participate in a shareholders’ meeting remotely, s/he should register with the company two days prior to the scheduled date of the shareholders’ meeting. A shareholder who participates in a shareholders’ meeting remotely is deemed present in person. After a shareholder logs in and checks in to the video conference platform, his or her shares will be included in the total shares of attendees and voting rights of the attending shareholders.
For those who have registered to participate in the shareholders’ meeting remotely when the company conducts a hybrid meeting, if they wish to participate instead in the physical shareholders’ meeting in person, they are also required to cancel the registration two days before the scheduled date of the shareholders’ meeting. If they fail to cancel the registration, they can only participate in the hybrid meeting.
If a shareholder, proxy solicitor, or proxy decides to participate in the shareholders’ meeting remotely after exercising their voting rights in writing or electronically, they are required to cancel the indication of their intent to exercise the above voting rights two days before the scheduled date of the shareholders’ meeting. If they fail to do so within the period, their exercise of the voting rights in writing or electronically shall govern, and if the shareholders attend the shareholders’ meeting remotely on that day, they can only exercise their voting rights over extempore motions but may neither vote on the original agenda items or amendments to the original agenda items nor propose amendments to the original agenda items.
V. Other requirements
In addition to the aforementioned requirements, the Shareholder Services Regulations and the Agenda Handbooks Regulations also respectively and specifically provide for the disclosure of attendance and voting rights at virtual shareholders’ meetings (Articles 44-15, 44-17, and 44-19 of the Shareholder Services Regulations), the handling of obstacles at virtual meetings (Article44- 20 of the Shareholder Services Regulations), the matters to be specified in the notice of the shareholders’ meeting, meeting agenda handbooks, and meeting minutes, as well as the electronic uploading of the meeting agenda handbooks and supplementary information (Article 44-21 and Article 44-22 of the Shareholder Services Regulations and Articles 3 and 6 of the Agenda Handbooks Regulations), the record retention of the shareholders’ meetings (Article 44-23 of the Shareholder Services Regulations), and other matters.
If a public company wishes to hold a virtual shareholders’ meeting, special attention should be paid to the above-mentioned requirements in order to avoid the risk of related disputes.
For the contents related to the draft amendments of January 14 of the same year to the Shareholder Services Regulations and the Agenda Handbooks Regulations, please refer to the LTP newsletter at: “The Amendment to the Taiwan Company Act for the Companies to Conduct a Virtual Shareholders’Meeting Without Amending the Articles of Incorporation, and the Draft Amendments to Sub-Laws Related to Public Companies Have Also Been Introduced“.